Leading When Things Go Wrong

‍‍May 31, 2013 - כב סיון תשעג By Erin Clare

Much of the current controversy surrounding the 15-year, $57 million fraud against the Conference on Jewish Material Claims Against Germany is focused on the responsibility of the organization’s leadership, which apparently didn’t discover or stop the theft even after receiving allegations about it.
Jewish organizations typically have a dual-leadership structure, in which paid professionals work with volunteer lay leaders. The ongoing fallout from the scandal at the Claims Conference, which annually processes hundreds of millions of dollars of
German reparations money to Holocaust survivors, should have volunteer leaders double checking the extent to which they might be held responsible in the event of a crisis at their organization.

Julius Berman was volunteer counsel to the Claims Conference in 2001. He was representing the Conference on a pro bono basis when an anonymous letter arrived that contained some detail about possible fraudulent restitution claims. Berman assigned an employee of his law firm to conduct a preliminary inquiry regarding the allegations and oversaw the employee’s work. The staffer produced an eight-page report, which contained a recommendation for further investigation. Berman reviewed the report and passed it on to the Claims Conference’s lead professional.

It appears that the “further investigation” recommendation in the report was not acted upon, and the full extent of the fraud was not uncovered until 2011. By then, Berman had risen to chairman of the conference. As the last leader from 2001 who is still active in the organization, Berman is receiving much of the blame for what is now being called a “botched investigation.”

It appears that everything Berman did in 2001 was proper. But was it enough? In hindsight, it appears that more could have been done. But is hindsight the correct perspective for viewing this story?

These questions implicate some very fundamental concerns for any charitable organization: What is the responsibility of a volunteer? Or a lay leader? And how appropriate is it for a lay leader to rely on the organization’s paid professionals?

After Berman delivered his firm’s 2001 findings and recommendation to the agency’s professional, did he have the obligation to investigate further or to follow up on his referral to the professional?

Julius Berman has a long and honorable history of service to the Jewish people and to survivors of the Holocaust. He is now being criticized for not doing more. While the Claims Conference scandal presents some unique aspects that aren’t likely to
be repeated, its fallout could present a chilling conundrum for volunteer leaders of other organizations who may not be willing to endure the spotlight if things were to go wrong.